In today’s briefing:
- Suzuki Motor Placement – Not the Best Time for a US$1.15bn Deal. It Will Be a Long Week.
- Suzuki Motor (7269 JP): A US$1.1 Billion Secondary Offering
- MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm
- Suzuki Motor (7269 JP) Placement: Limited Index Buying & Weak Markets Could Pressure Stock
- Nintendo (7974) | Next-Gen Switch 2 Meets Next-Level Margin Risk
- Tosei Corp (8923 JP): Q1 FY11/25 flash update
- SBI RHEOS HIFUMI (165A JP): Coverage Initiation
- Create Sd Holdings Co (3148 JP): Q3 FY05/25 flash update
Suzuki Motor Placement – Not the Best Time for a US$1.15bn Deal. It Will Be a Long Week.
- Tokio Marine Holdings (8766 JP) and Sompo Holdings (8630 JP) aim to raise around US1.15bn (including over-allotment) via selling around 5% of Suzuki Motor (7269 JP).
- While Suzuki doesn’t have much direct exposure to the US markets, its shares have still corrected in line with other auto players.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
Suzuki Motor (7269 JP): A US$1.1 Billion Secondary Offering
- Suzuki Motor (7269 JP) has announced a secondary offering of up to 95.7 million shares (110.1 million including overallotment), worth around US$1.1 billion (US$1.3 billion including overallotment).
- Suzuki’s goal with the secondary offering is (i) to reduce cross-shareholdings and (ii) to expand and diversify the shareholder base, which should further enhance liquidity.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 21 and 23 April (likely 21 April).
MitCorp (8058) BIG Buyback – Share Demand Will Help Weather The Storm
- On 3 April mid-day, Mitsubishi Corp (8058 JP) announced its FY25 earnings guidance and new “Shareholder Return Strategy”, a ¥1 trillion buyback, and its “Corporate Strategy 2027” Mid-Term Management Plan.
- The FY25 forecast is for a third consecutive decline in underlying operating cashflow, but a hike in dividend from ¥100 to ¥110 and a ¥1trln share buyback, including ¥230bn tender.
- The combination of dividend and buyback should be 15% of market cap over the next 12mos. And I expect Warren Buffett will consider buying dips.
Suzuki Motor (7269 JP) Placement: Limited Index Buying & Weak Markets Could Pressure Stock
- Tokio Marine & Nichido Fire Insurance and Sompo Japan Insurance are looking to offload their entire stakes in Suzuki Motor (7269 JP) by way of a secondary offering.
- With the size of the secondary offering less than 5% of the number of shares, there could be no index buying in the short-term and that will pressure the stock.
- If the overallotment option is exercised and the seller of the shares is currently considered as non-float, there could be small passive buying in the short-term.
Nintendo (7974) | Next-Gen Switch 2 Meets Next-Level Margin Risk
- Tariff Headwinds: U.S. import tariffs could wipe out hardware margins, potentially costing Nintendo up to ¥95bn in FY3/26 gross profit.
- Guidance Risk: With bullish consensus expecting ¥450bn in FY3/26 operating profit, upcoming guidance on July 5 may significantly disappoint.
- Valuation Hinges on Recovery: FY3/27 earnings could rebound to ¥600bn if cycle normalises and tariff risks ease—implying a fair 13x EV/EBIT multiple.
Tosei Corp (8923 JP): Q1 FY11/25 flash update
- Revenue increased by 32.1% YoY, reaching JPY46.1bn, with operating profit up 28.5% YoY to JPY12.3bn.
- Development business sold eight buildings, including logistics facilities, contributing to overall revenue and profit growth.
- Segment profit margins varied, with notable increases in asset management and hotel segments, driven by improved occupancy rates.
SBI RHEOS HIFUMI (165A JP): Coverage Initiation
- In FY03/24, AUM was JPY1.4tn (+19.6% YoY), operating revenue JPY10.3bn (+6.7% YoY), operating profit JPY1.8bn (+10.6% YoY), recurring profit JPY1.8bn (+10.6% YoY), and net income attributable to owners of the parent JPY1.3bn (+20.8% YoY).
- The company continued to expand its distribution partner network and product lineup.
- The Japanese equity market remained strong, and the rise in NAV per share drove up AUM to JPY1.4tn (+19.6% YoY).
Create Sd Holdings Co (3148 JP): Q3 FY05/25 flash update
- Revenue increased by 8.4% YoY to JPY339.5bn, with gross profit rising 7.6% YoY to JPY88.1bn.
- Operating profit grew 5.4% YoY to JPY16.4bn, supported by revenue growth and cost control measures.
- Net income attributable to owners rose 4.4% YoY to JPY11.2bn, despite intensified price competition and market challenges.
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